You are the Minister for Trade and Industry for a small developing nation. Economic fortunes are not in your country’s favor at this time. You are under pressure to intervene with a series of measures to protect domestic businesses. In the past, it has been the practice to restrict interventions and rely on a free market economy. Business closures, poor export figures, and growing unemployment is forcing your hand. Nationalists are demanding immediate action against overseas corporations to deter them from taking advantage of the situation. Trade unions are demanding job and wage protection. You wish to have the minimum impact on the functioning of the free market, but recognize that more drastic action might be necessary at a later date. Questions:

1). The country’s infant agricultural sector needs particular protection. What are the problems with protecting infant sectors?

2). Which of the three main problems is the most dangerous to the government?

3). What is the likely reaction of trading partners if your country decides to impose trade restrictions of some sort on them?